The Royal Mile, the main street of Edinburgh's medieval Old Town, is a long string of weathered grey stone and brick. Then there's a curvy new façade studded with square windows - the new Hotel Missoni Edinburgh. Inside it's anything but grey, bursting with a kaleidoscope of colour that evokes the Italian fashion house's trademark patterned knitwear. The Missoni is just the newest in a growing number of fashion-branded hotels. In an effort to expand their influence - and keep cash registers ringing - fashion houses are heading into hospitality: Heavy hitters Missoni and Armani are putting their brand on hotels, incorporating fashion components into the interior design and creating hotel experiences that reflect the brands' images.

With Missoni, that means unfussy elegance. The hotel was designed top to bottom by label matriarch and creative director Rosita Missoni to generate a sense of home. According to director of sales Tracy Solly, the concept includes all-inclusive billing and little extras - like free beer and water in the mini-bar, free Internet, home cooking with Missoni family recipes at the Cucina restaurant and free in-house laundry during your stay. "It's the full
dolce vita," Solly adds. "If you want a shirt washed for the morning, it's no problem."

The hotel follows the example set by other designers during a previous surge of hotel- couture hybrids a few years back. The fashion house Ferragamo became involved in running hotels in Florence in the nineties, and Versace branded a hotel in 2000 - followed by Christian Lacroix (with a hotel in Paris) and Bulgari (in Milan and Bali).

And what makes a hotel a fashion hotel? At Missoni Edinburgh, the rooms and suites are full of iconic Missoni patterns and prints in mostly black and white, punctuated with vivid strokes of colour. Bathrooms exude luxury with purple lacquered walls, white zig-zag-weave cotton towels, plush black-and-white patterned robes and black velvet slippers. Windows are treated with dizzying, black-and-white floral-patterned curtains - a black and white fringe curtain subs for the standard white sheers. Wall-mounted red lacquered dresser drawers are too small to hold much, but they look good enough to eat. A sliding mirror reveals an open closet with the kind of slanted chrome rods you'd find in a boutique. A green lacquered cupboard with glass shelving and floral-patterned lining displays delicate demitasse cups and saucers (for sale at $200 a set) for the Nespresso coffee-maker below. And the bedspreads are so beautiful, they will never, ever get rolled up and stuffed in a corner.

Although Edinburgh may seem like an odd choice to launch an Italian hotel, it was in fact chosen for its down-to-earth vibe. After all, a hotel can't survive on fashionistas alone. "We cater to the upscale leisure market, with an element of corporate, which you need mid-week to survive in Edinburgh," Solly says. The area around the hotel is teeming with lawyers, judges and other business people from the nearby headquarters of the Royal Bank of Scotland.

Selling to such a business clientele is smart marketing, since fashion hotels generally appeal to a limited segment of high-end travellers.

Ceri Marsh, editor-in-chief of the magazine Fashion, pegs them as trend followers, the same people who flocked to boutique hotels when that trend was born. "That crowd then moved on to unique, one-off hotels, like The Inn LW12 in New York, with quirky art in the lobby and granny-style decor. It was almost an anti-boutique hotel," she says, referring to the "art hotel" trend of the past few years. "Now, if you have a choice between a Meridien, a Ritz or something like the Missoni, you go with the fashion hotel because it has that extra cachet, especially if you're a lover of the designer."

That equation is most powerful in the Middle East, where there has been huge demand for both luxury goods and real estate. Missoni opens another hotel in Kuwait this fall. Then in Dubai, Giorgio Armani will launch the first Armani Hotel in the bottom 37 floors of the Burj Dubai skyscraper, the world's tallest building, this December. The sensibility of Armani's clothing designs is reflected in the hotel's moody, sparsely furnished, almost masculine interiors. (Then there are the ultra-modern spa bathrooms, replete with metres of marble and rich wood.) As well, a recruitment drive to find staff spanned 16 countries to make sure the hotel has a cosmopolitan tone.

Up next with a new hotel is Versace: the Palazzo Versace Dubai, scheduled for early 2010. Dripping with trademark Versace over-the-top extravagance, the hotel design mimics world-famous palace layouts with the central area allocated for the hotel and the side wings for condos. Details include Italian marble floors and ornate panelling, with sculptures and design artifacts at every turn.

Lebanese designer Elie Saab, whose gowns have graced stars such as Halle Berry and Angelina Jolie, has designed a boutique hotel in the Tiger Woods Dubai golf community. The bungalows and suites will reflect Saab's simple taste, with interiors incorporating contemporary design contrasting with the traditional Arabian style of the exteriors. Top-tier travellers will be able to enjoy a dip in the 10,000-square-foot pool when they're not hitting the links.

This extension of haute couture from clothing to living space is evolving at a natural pace: Some labels - including Missoni, which launched Missoni Home in 1983 - have already ventured into houseware design.

"If fashion designers are going to get involved in furniture and accessories," Marsh adds, "why not hotels?"